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Arizona Withholding: What you need to know

Arizona employers are required to deduct state income tax from employees' earnings during each payroll period. Different percentages apply, depending on the employees' annualized federal income for liability.
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Withholding applies to:
• Wages of residents for income earned in Arizona.
• Wages of nonresidents for income earned in Arizona. Residents of California, the District of Columbia, Indiana, Oregon, and Virginia may apply for an exemption from Arizona withholding on form WEC.
Generally, employees who are subject to federal income tax withholding are also subject to state income tax withholding. Agricultural, domestic, and most other employees who are exempt from federal withholding are also exempt from state withholding.
Withholding applies to all wages, including cash payments such as salaries, commissions, and bonuses, as well as the market value of noncash payments such as meals, lodging, and goods. Generally, compensation that is subject to federal withholding is also subject to state withholding. State income tax definitions conform to the federal tax provisions (AZ Stat. Sec. 43-105).
Employers may withhold Arizona taxes from the wages of residents earned outside of Arizona as a service to those employees.
Businesses considering the use of contract workers are cautioned to consult with their tax professional for advice.
The amount required to be withheld is based on a table issued by the Department of Revenue. The withholding table is based on a percentage of gross taxable wages that meets the federal definition of "wages" reported in box 1 of the employee's federal Form W-2. Employees subject to Arizona income tax withholding and working in Arizona must ...

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Arizona Withholding Resources

Withholding Products

Taxation and Withholding Explained Webinar Recording
BLR Webinar: "Taxation and Withholding Explained: Compliance Tips for Multistate Employers""
Employment Taxes in Multiple States Webinar Recording
BLR Webinar: "Employment Taxes in Multiple States: Step-by-Step Calculation and Reporting Strategies""
Payroll Webinar Recording
BLR Webinar: "Payroll: How to Legally Handle Tax Levies and Garnishments""
IRS and ICE Audit Alert Webinar Recording
BLR Webinar: "IRS and ICE Audit Alert: How to Avoid and Manage Payroll and Recordkeeping Scrutiny""
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Claim Your Free Copy of Top 100 FLSA Overtime Q&As

We’ve compiled a list of the 100 most commonly asked questions we have received on the federal Fair Labor Standards Act (FLSA) overtime regulations.
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This report, "Top 100 FLSA Q&As", is designed to provide you with an examination of the federal FLSA overtime regulations in Q&A format, including valuable tips for bringing your workplace into compliance in an affordable manner.

At the end of the report, you will find a list of state resources on wage and hour issues. This report includes practical advice on topics such as:
  • FLSA Coverage: How FLSA regulations apply to all employers and any specific exemptions from the overtime requirements
  • Salary Level: Qualifying for exemptions and nonexempt employees
  • Deductions from Pay: Deducting for violations, disciplinary reasons, sick leave, or personal leave


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